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CMW International LLC v. Amerisure Insurance Co.

United States District Court, S.D. Indiana, Indianapolis Division

December 27, 2016

CMW INTERNATIONAL LLC and EVERGREEN HOLDINGS INTERNATIONAL, LLC, Plaintiffs/Counter Defendants,
v.
AMERISURE INSURANCE CO., Defendant/Counter Claimant.

          ORDER ON PLAINTIFFS' MOTION FOR PRELIMINARY INJUNCTION

          TANYA WALTON PRATT, JUDGE United States District Court T Southern District of Indiana

         This matter is before the Court on a Motion for Preliminary Injunction filed pursuant to Federal Rule of Civil Procedure 65 by Plaintiffs CMW International, LLC and Evergreen Holdings International, LLC (collectively, “CMW”) (Filing No. 5). CMW seeks a declaratory judgment regarding its rights in relation to its insurer, Defendant Amerisure Mutual Insurance Company (“Amerisure”). After environmental liability claims were asserted against CMW, Amerisure was notified of the claims and CMW hired defense counsel and an environmental consultant. CMW seeks a declaration that it is entitled to retain its chosen defense counsel and environmental consultant rather than have Amerisure impose its selected defense counsel and environmental consultant on CMW. In its Motion, CMW asks for a preliminary injunction prohibiting Amerisure from interfering with CMW's relationship with its chosen defense counsel and environmental consultant and requiring Amerisure to continue paying environmental defense costs. For the following reasons, the Court DENIES CMW's Motion for Preliminary Injunction.

         I. LEGAL STANDARD

         “A preliminary injunction is an extraordinary remedy never awarded as of right.” Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7, 24 (2008). Granting a preliminary injunction is “an exercise of a very far-reaching power, never to be indulged in except in a case clearly demanding it.” Roland Mach. Co. v. Dresser Indus., Inc., 749 F.2d 380, 389 (7th Cir. 1984) (citation and quotation marks omitted). When a district court considers whether to issue a preliminary injunction, the party seeking the injunctive relief must demonstrate that:

(1) it has a reasonable likelihood of success on the merits of its claim; (2) no adequate remedy at law exists; (3) it will suffer irreparable harm if preliminary injunctive relief is denied; (4) the irreparable harm it will suffer without preliminary injunctive relief outweighs the irreparable harm the nonmoving party will suffer if the preliminary injunction is granted; and (5) the preliminary injunction will not harm the public interest.

Platinum Home Mortg. Corp. v. Platinum Fin. Group, Inc., 149 F.3d 722, 726 (7th Cir. 1998). The greater the likelihood of success, the less harm the moving party needs to show to obtain an injunction, and vice versa. Girl Scouts of Manitou Council, Inc. v. Girl Scouts of the United States of America, Inc., 549 F.3d 1079, 1086 (7th Cir. 2008).

         II. BACKGROUND

         In the 1940's P. R. Mallory & Company (“Mallory”) developed battery technology that it would later trademark under the brand name “Duracell.” Mallory's Indianapolis, Indiana operations occupied a large parcel of land centered in and around 70 South Gray Street (the “Property”), where it manufactured capacitors, timers, controls and metallurgical and specialty metal products. Following a series of mergers, acquisitions and sales, the metallurgical division of Mallory was spun off into Contacts, Metals and Welding, Inc. d/b/a CMW, Inc., which operated on the property at 70 South Gray Street since 1978, and owned the Property since 1983. Plaintiff CMW is the successor in interest to CMW Inc. The remaining property surrounding the Property was occupied and used for manufacturing by a number of entities, including predecessors of Battery Properties, Inc. (“BPI”).

         CMW has comprehensive general liability insurance policies issued by Amerisure that provide insurance coverage for certain environmental liability claims related to the Property.

         Sometime before September 2014, BPI began investigating potential environmental contamination at its property as well as CMW's Property and the surrounding area. During its investigation, BPI uncovered evidence of environmental contamination related to CMW and its predecessors' use of chlorinated solvents in their operations. Soil borings and groundwater monitoring by BPI's environmental consultant detected high concentrations of chlorinated solvents and other related products in the soil and groundwater on and around the Property. BPI reported these findings to the Indiana Department of Environmental Management (“IDEM”).

         On September 17, 2014, IDEM notified CMW that it was a “responsible person, ” allegedly responsible for environmental contamination that had been found on and around the Property. In addition, BPI has alleged that CMW is responsible for a portion of the environmental response costs related to studies about environmental contamination at the same Property. CMW faces significant exposure measured in the millions of dollars arising from the environmental contamination on and around the Property. Among other things, IDEM has demanded that CMW take certain actions to monitor and assess the contaminants' spread and impact on the area surrounding the Property. Delay in carrying out these steps could subject CMW to a regulatory enforcement action brought by IDEM.

         From March 1, 1987 through March 1, 1999, and then again from October 15, 2007 through December 15, 2013, Amerisure provided insurance to CMW pursuant to commercial general liability policies. The insurance policies require Amerisure to defend and indemnify CMW against covered liability claims. The policies give Amerisure the “right and duty to defend” its insureds against covered environmental claims. The policies also require CMW to cooperate with Amerisure in its defense of claims.

         On October 17, 2014, BPI's counsel notified some of CMW's insurers that there was environmental contamination suspected at the Property. On February 19, 2015, BPI's counsel sent CMW's insurers, including Amerisure, a letter notifying them of the environmental contamination at the Property and their duty to defend and indemnify.

         CMW was not satisfied with the environmental work that was being completed under the direction of BPI, so CMW hired its own environmental attorney and consultant (Ice Miller and Environmental Forensic Investigations) in September 2015. On September 11, 2015, Ice Miller sent CMW's insurers, including Amerisure, a letter informing them of CMW's retention of Ice Miller as counsel and the insurers' duty to reimburse CMW for the costs of its legal defense and environmental consulting work. The insurers, including Amerisure, were also notified of CMW's retention of Environmental Forensic Investigations on October 1, 2015. On October ...


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